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Valencia College *

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2000

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Finance

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Apr 3, 2024

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2

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Ronald Ruiz Martinez FIN 6806-101: Advanced Financial Mgmt March 30 th , 2024 FIN 6806-101: Advanced Financial Mgmt Understanding how to read and analyze a financial statement, manager or investors determine a business profitability, ability to expand a business, or catch problems before they grow. By analyzing the main types of financial statements: The balance sheet, income statement, and the cash flow statement one can analyze how a business is performing and its profitability. The article How to Read (and Analyze) Financial Statements by Bryce Warnes, explains how to analyze a corporation’s financial reports Then, use some basic financial ratios to see how a business is performing. The author begins the article by analyzing how to interpret a balance sheet, income statement and cash flow statements. When interpreting a balance sheet, it is crucial to understand the parts that make up a balance sheet: Assets, liabilities and Owner’s Equity. The article reviews how to read an income statement to determine a corporations financial standing over the reporting period. The income statement calculates net profit utilizing the formula: Gross profit minus operating expenses and taxes also known as the bottom line. The components of an income statement are: Sales revenue, COGS, Gross profit, General expenses, EBITDA, Income tax expenses and Net profit. When reading a cash flow statement one must remember it is mainly used for small business utilizing accrual method of accounting. At its simple state, a cash flow statement tracks the inflow and outflow of cash, containing the following line items: Cash beginning of period, net income, additions to cash. This article reviewed how to analyze a public business financial statement, which is
Ronald Ruiz Martinez FIN 6806-101: Advanced Financial Mgmt March 30 th , 2024 needed when recreating their financials in module 2. In conclusion, the article gave a brief explanation as to each components that make ups an businesses financial statements and provides a clear financial standing of the business. Work Cited Misamore, Brian. “How to Price a Bond: An Introduction to Bond Valuation.” Harvard Business School Online , 2 June 2017, online.hbs.edu/blog/post/how-to-price-a- bond.
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